Law No. 9,307/96 (English)

BRAZILIAN ARBITRATION ACT

Law nº 9307, 23 September 1996
– Regarding Arbitration –

 

THE PRESIDENT OF THE REPUBLIC

Let it be known that the National Congress decrees and I ratify the following law:

 

CHAPTER I
GENERAL PROVISIONS

Article 1 – Persons capable of entering into contracts may settle through arbitration disputes related to freely transferable patrimonial rights.

Article  2 – At the parties’ discretion, arbitration may be in law or in equity.

§ 1 – The parties may freely choose the rules of law applicable in the arbitration, as long as their choice does not violate good morals and public policy.

§ 2 – The parties may also stipulate that the arbitration shall be conducted under general principles of law, customs, usages and the rules of international trade.

 

CHAPTER II
THE ARBITRATION AGREEMENT AND ITS EFFECTS

Article 3 – The parties may submit their disputes to arbitration by virtue of the arbitration agreement, which may be in the form of either an arbitration clause or a submission agreement. (compromisso)

Article 4 – An arbitration clause is an agreement by which the parties to a contract undertake to submit to arbitration the disputes which may arise with respect to that contract.

§ 1 – The arbitration clause shall be in writing and it can be inserted in the main contract or in a document to which it refers.

§ 2 – In adhesion contracts, the arbitration clause will only be valid if the adhering party takes the initiative to initiate arbitration proceedings or if it expressly agrees to arbitration by means of an attached written document, or if it signs or initials the corresponding contractual clause, inserted in boldface type.

Article 5 – If the arbitration clause makes reference to the rules of a particular arbitral institution or specialised entity, the arbitration shall be commenced and conducted in accordance with such rules; it being also possible that the parties determine in the arbitration clause itself, or in a stand alone document, the agreed procedure for commencing arbitral proceedings.

Article 6 – In the event of absence of provision as to the method of commencing the arbitration, the interested party shall notify the other party, either by mail or through any other means of communication, with confirmation of receipt, of its intention to commence arbitral proceedings, fixing a date, time and place for signature of the submission agreement (compromisso).

Sole Paragraph: If the notified party fails to appear, or it refuses to sign the submission agreement (compromisso), the other party may file the action provided for in Article 7 of this Law, at the State Court originally competent to decide the case.

Article 7 – Where there is an arbitration clause but one of the parties shows resistance as to the commencement of arbitration, the interested party may request the court to summon the other party to appear in court so that the submission agreement (compromisso) may be signed; the judge shall designate a special hearing for this purpose.

§ 1 – The plaintiff shall specify, in detail, the subject matter of arbitration, including in its motion the document that contains the arbitration clause.

§ 2 – If the parties attend the hearing, the judge shall first try to bring the parties into a settlement. If the judge does not succeed, he/she shall lead the parties to approve, by mutual agreement, the submission agreement (compromisso).

§ 3 – If the parties fail to agree on the terms of the submission agreement (compromisso), the judge, after hearing the defendant, shall determine on the contents thereof, either at the same hearing or within ten days, in accordance with the provisions of the arbitration clause, taking into account the provisions of Articles 10 and 21 § 2º of this Law.

§ 4 – If the arbitration clause has no provision as to the appointment of arbitrators, the judge, after hearing the parties, shall rule thereon, being allowed to appoint a sole arbitrator to decide the dispute.

§ 5 – If the plaintiff, without good cause, fails to appear at the hearing designated for the drafting of the submission agreement (compromisso), the case will be dismissed without judgment on the merits.

§ 6 – If the defendant fails to attend the hearing, the judge, after hearing the plaintiff, shall have the authority to establish the contents of the submission agreement (compromisso), and to appoint a sole arbitrator.

§ 7 – The judge’s decision granting the motion shall be deemed to be the submission agreement (compromisso) itself.

Article 8 – An arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

Sole paragraph – The arbitrator has jurisdiction to decide ex officio or at the parties’ request, the issues concerning the existence, validity and effectiveness of the arbitration agreement, as well as the contract containing the arbitration clause.

Article 9 – The submission agreement (compromisso) is the judicial or extrajudicial agreement by which the parties submit an existing dispute to arbitration by one or more persons.

§ 1 – The judicial submission agreement (compromisso) shall be entered into by a written deed entered in the case record before the court or tribunal where the suit is pending.

§ 2 – The extrajudicial submission agreement (compromisso) shall be entered into by private written deed, executed by two witnesses or by a public notary.

Article 10 – The submission agreement (compromisso) must contain:

I – the name, profession, marital status and domicile of the parties;

II – the name, profession, marital status and domicile of the arbitrator or arbitrators, or, if applicable, the identification of the institution to which the parties have entrusted the appointment of the arbitrators;

III – the subject matter of  the arbitration; and

IV – the place where the award shall be rendered.

Article 11 – The submission agreement (compromisso) may also contain:

I – the place or places where the arbitration will be held;

II – if the parties so agree, the provision authorising the arbitrators or arbitrators to decide in equity;

III – the time limit for making of the arbitral award;

IV – an indication of the national law or institutional rules applicable to the arbitration, if agreed upon by the parties;

V – provisions as to the responsibility for the fees and costs involved in the arbitral proceedings; and

VI – stipulation as to the fees of the arbitrator or arbitrators.

Sole paragraph – If the parties establish the fees of the arbitrator or arbitrators in the submission agreement (compromisso), this document will be considered an extrajudicial enforceable instrument. In the absence of such provision, the arbitrator will request the court originally competent to hear the case to rule upon such question.

Article 12 – The submission agreement (compromisso) is terminated:

I – if any arbitrator excuses himself, prior to accepting his appointment, as long as the parties have expressly declared that they will not accept substitution;

II – if any arbitrator dies or becomes unable to act as such, as long as the parties have expressly declared that they will not accept substitution; and

III – upon expiration of the time limit referred to in Article 11, item III, as long as the interested party has notified the arbitrator, or the chairman of the arbitral tribunal, granting him/her a further period of ten days for the making and presentation of the arbitral award.

 

CHAPTER III
THE ARBITRATORS

Article 13 – Any individual with legal capacity, trusted by the parties, may be appointed as arbitrator.

§ 1 – The arbitral tribunal shall be composed of an uneven number of arbitrators. The parties are free to appoint substitute arbitrators.

§ 2 – When the parties have agreed on an even number of arbitrators, the arbitrators are deemed to be entitled to appoint an additional arbitrator. Failing such agreement, the parties shall request the State Court which originally would have jurisdiction to hear the case to appoint such arbitrator, following to the possible extent, the procedure foreseen in Article 7 of this Law.

§ 3 –  The arbitrator(s) shall be appointed by any method agreed by the parties or through the rules of the arbitral institutional or specialised entity chosen by them.

§ 4 – Once several arbitrators have been appointed they shall elect, by majority, the chairman of the arbitral tribunal. Failing consensus, the eldest shall become the chairman.

§ 5 – The arbitrator or the chairman of the arbitral tribunal may designate a secretary who may be one of the arbitrators.

§ 6 – In performing his duty, the arbitrator shall proceed diligently, efficiently, independently and shall be free and remain free from bias.

§ 7 – The sole arbitrator or the arbitral tribunal may order the parties to advance the funds to cover expenses and services it may deem necessary. 

Article 14 – Individuals somehow linked to the parties or to the submitted dispute, by any of the relationships resulting in the impediment or suspicion of Court members, are prevented from acting as arbitrators and become subject, as the case may be and to the applicable extent, to the same duties and responsibilities imposed on Court members by the Code of Civil Procedure.

§ 1 – An individual appointed to serve as arbitrator, before accepting the case, shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence.

§ 2 – A party may challenge the appointed-arbitrator only for reasons of which it becomes aware after the appointment has been made, unless:

I – the arbitrator was not appointed directly by the party; or

II – the reason for the challenge of the arbitrator becomes known after his/her appointment.

Article 15 – The party who intends to challenge the arbitrator shall, pursuant to Article 20, file the respective motion, either directly to the arbitrator or the chairman of the arbitral tribunal, setting forth its reasons with supporting evidence.

Sole paragraph – If the motion is granted, the suspect or impeded arbitrator will be removed and replaced in accordance with Article 16 of this law.

Article 16 – If the arbitrator withdraws prior to accepting his/her appointment, or if he dies after acceptance or he/she is successfully challenged, or becomes unable to carry out his duties, his/her position shall be taken by the substitute member appointed in the submission agreement (compromisso), if any.

§ 1 – If no substitute has been appointed, the rules of the arbitral institution or specialised entity shall apply, if the parties have invoked them in the arbitration agreement.

§ 2 – In the absence of any provision in the arbitration agreement and the parties fail to reach an agreement as to the appointment of the substitute arbitrator, the interested party shall proceed in the manner set forth in Article 7 of this law, unless the parties have stated, in the arbitration agreement, that they will not accept a substitute arbitrator.

Article 17 – The arbitrators in the exercise of their functions or as a result thereof shall be considered comparable to public officials for the purpose of criminal legislation.

Article 18 – The arbitrator is the judge in fact and in right, and his/her award is not subject to appeal or homologation by State Courts.

 

CHAPTER IV
THE ARBITRAL PROCEEDINGS

Article 19 – The arbitration shall be deemed to be commenced when the appointed is accepted by the sole arbitrator or by the arbitrators, if several.

Sole paragraph – Once the arbitration is commenced, and if the sole arbitrator or the arbitral tribunal considers that an issue included in the arbitration agreement must be clarified, an addendum shall be drafted, together with the parties and be executed by all, this document becoming part of the arbitration agreement. 

Article 20 – The party wishing to raise issues related to the jurisdiction, suspicion or impediment of an arbitrator or arbitrators, or as to the nullity, invalidity or ineffectiveness of the arbitration agreement, must do so at the first opportunity, after the commencement of the arbitration.

§ 1 – When the challenge is accepted, the arbitrator shall be replaced in accordance with Article 16 of this law; and if the lack of jurisdiction of the arbitrator or of the arbitral tribunal, as well as the nullity, invalidity or ineffectiveness of the arbitration agreement is confirmed, the parties shall revert to the State Court competent to rule on the matter.

§ 2 – When the challenge is not accepted, the arbitration shall proceed normally, subject however to review of that decision by the competent State Court if an action dealt with in Article 33 of this Law is filed.

Article 21 – The sole arbitrator or the arbitral tribunal shall comply with the procedure agreed upon by the parties in the arbitration agreement, which may refer to the rules of an arbitral institution or specialised entity, it being possible for the parties to empower the sole arbitrator or the arbitral tribunal to regulate the procedure.

§ 1 – In the absence of any provisions on the procedure, the sole arbitrator or the arbitral tribunal shall conduct the arbitration in such a manner it considers appropriate.

§ 2 – The principles of due process of law, equal treatment of the parties, impartiality of the arbitrator and freedom of decision shall always be respected.

§ 3 – The parties may be represented by legal counsel, and may always be free to choose their representative or assistant at the arbitral procedure.

§ 4 – The sole arbitrator or the arbitral tribunal shall, at the commencement of the procedure, try to conciliate the parties, applying, to the extent possible, Article 28 of this law.

Article 22 – The sole arbitrator or the arbitral tribunal, either ex officio or at the parties’ request, may take testimonies, hear witnesses and determine the production of expert examinations and other evidence deemed necessary.

§ 1 – Testimonies by parties and witnesses shall be taken at places, dates and hours previously communicated in writing to the parties, and a summary record thereof shall be signed by the deponent or at his/her request, also by the arbitrators.

§ 2 – If a party fails, without good cause, to comply with a request to render personal testimony, the arbitrator or the arbitral tribunal shall give due consideration to such behaviour when issuing the award; and if a witness, under the same conditions, is absent, the arbitrator or the chairman of the arbitral tribunal may request the State Court to compel the appearance of the defaulting witness, upon evidence of the existence of an arbitration agreement.

§ 3 – Default by a party shall not prevent the arbitral award from being made.

§ 4 – With the exception of the provisions of Paragraph 2, if coercive or injunctive orders become necessary, the arbitrators may request them from the State Court originally competent to decide the case.

§ 5 –  If an arbitrator is substituted during the arbitral procedure, his substitute may, at his discretion, determine what evidence shall be repeated.

 

CHAPTER V
THE AWARD

Article 23 – The award shall be made during the time frame stipulated by the parties. If no agreement is made, the arbitral award shall be made within six months from the date of the commencement of the arbitration or from the date of the substitution of an arbitrator.

Sole paragraph – The parties and the arbitrators, by mutual agreement, may extend the stipulated time period.

Article 24 – The arbitral award shall be made in writing.

§ 1 –  If there are several arbitrators, the decision shall be taken by majority vote. Failing majority determination, the opinion of the chairman of the arbitral tribunal shall prevail.

§ 2 –  A dissenting arbitrator may, if he/she so wishes, render a separate decision.

Article 25 – If, during the course of the proceedings, a dispute arises regarding rights not freely transferable, and once convinced that the final decision may depend thereon, the sole arbitrator or the arbitral tribunal may refer the parties to the State Court having jurisdiction, ordering a stay of the arbitral proceedings.

Sole paragraph – The arbitration shall recommence after the preliminary question is resolved and evidence has been entered in the file of the final non-appealable judgment thereon.

Article 26 – The arbitral award must contain:

I – a report, including parties’ personal data, as well as a summary of the dispute;

II – the grounds of the decision with due analysis of factual and legal issues, including, if it is the case, a statement of the decision in equity;

III – the actual decision wherein the arbitrators shall resolve questions that are submitted to them and establish a time limit for the compliance with the decision, as the case may be; and

IV – date and place of the making of the award.

Sole paragraph – The arbitral award shall be signed by the arbitrator or all arbitrators. If one or more arbitrators is unable to or refuse to sign the award, the chairman of the arbitral tribunal shall certify such fact.

Article 27 – The arbitral award shall decide on the parties’ responsibilities  regarding costs and expenses for the arbitration, as well as on any amount resulting from bad-faith conduct, as the case may be, following the provisions of the arbitration agreement, if any.

Article 28 – If the parties settle during the course of arbitral proceedings, the arbitrator or arbitral tribunal may, at the parties’ request, render an arbitral award declaring such fact, containing the requirements provided for in Article 26 of this law.

Article 29 – The rendering of the arbitral award marks the end of the arbitration; the sole arbitrator or the chairman of the arbitral tribunal must send a copy of the decision to the parties by mail or by other means of communication, with confirmation receipt, or through direct delivery to the parties, against receipt.

Article 30 – An interested party may, within five days immediately following the receipt of the award or the personal delivery of it, having informed the other party, may request the sole arbitrator or the arbitral tribunal to:

I – rectify any clerical errors in the award;

II – clarify any obscurity, doubt or contradiction of the arbitral award or to decide on an omitted issue that should have been decided.

Sole paragraph –  The arbitrator or the arbitral tribunal shall decide within ten days, through an addendum to the award, which shall be communicated to the parties in accordance with Article 29.

Article 31 – The arbitral award shall have the same effect on the parties and their successors as a judgement rendered by a State Court and, if includes an obligation for payment, it shall constitute an enforceable instrument thereof.

Article 32 – An arbitral award is null and void if:

I – the submission agreement (compromisso) is null and void;

II – it is made by an individual who could not serve as an arbitrator;

III – it does not comply with the requirements of Article 26 of this law;

IV – it has exceeded the limits of the arbitration agreement;

V – it does not resolve the whole dispute submitted to arbitration;

VI – it has been duly proved that it was made through unfaithfulness, extortion or corruption;

VII – it is rendered after the time limit has expired, except in the case of Article 12, item III of this law; and

VIII – it disregards the principles covered by article 21, paragraph 2 of this law.

Article 33 – The interested party may submit to the State Court having jurisdiction an application for setting aside the award in the cases set forth in this law.

§ 1 – The action for setting aside the arbitral award shall follow the requirements provided by the Code of Civil Procedure and shall be filed within ninety days immediately following receipt of the award or its addendum.

§ 2 – The judgement granting the setting aside motion shall:

I – declare the arbitral award null and void in the cases foreseen in Article 32, items I, II, VI, VII, VIII;

II – order the sole arbitrator or the arbitral tribunal to render a new award, in the other cases.

§ 3 – The motion for the setting aside of the arbitral award may also be submitted by way of an action of debtor’s defence, in accordance with Article 741 and following of the Code of Civil Procedure, if a judicial enforcement is instituted.

 

CHAPTER VI
RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

Article 34 – A foreign award shall be recognised and enforced in Brazil in accordance with international treaties effective in the internal legal system, or, in the absence of that, strictly according to the terms of this law.

Sole paragraph – A foreign award is an award rendered outside the national territory.

Article 35 – To be recognised or enforced in Brazil, the foreign arbitral award is subject only to homologation by the Federal Supreme Court .

 Article 36 – The provisions of Articles 483 and 484 of the Code Civil Procedure shall apply, to the extent possible, to the request for homologation of foreign arbitral award.

 Article 37 – The request for homologation of a foreign award shall be submitted by the interested party; this written motion shall meet the requirements of Article 282 of the Code of Civil Procedure, and must be accompanied by:

I – the original of the arbitral award or duly certified copy authenticated by the Brazilian consulate, accompanied by a sworn translation;

II – the original arbitration agreement or a duly certified copy, accompanied by a sworn translation.

Article 38 – The request for recognition or enforcement of an arbitral award may be denied only if the defendant furnishes proof that:

I – the parties to the arbitration agreement were under some incapacity;

II – the arbitration agreement was not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made;

III – it was not given proper notice of the appointment of an arbitrator or the arbitral proceedings or was otherwise unable to present his case;

IV – the arbitral award was rendered beyond the limits of the arbitration agreement and it was not possible to separate the exceeding part from what has been submitted to arbitration;

V – the commencement of the arbitration proceedings was not in accordance with the submission agreement (compromisso) or the arbitration clause;

VI – the arbitral award has not yet become binding on the parties or has been set aside or suspended by a Court of the country in which the arbitral award has been made.

Article 39 – The request for recognition or enforcement of a foreign award shall also be denied if the Federal Supreme Court finds that:

I – according to Brazilian law, the subject-matter of the dispute is not capable of settlement by arbitration;

II – the recognition or enforcement of the award is contrary to Brazilian public policy.

Sole paragraph – The services of summons on a party resident or domiciled in Brazil, pursuant to the arbitration agreement or to the procedural law of the country in which the arbitration took place, including mail with confirmation of receipt, shall not be considered as offensive to Brazilian public policy, provided the Brazilian party is granted sufficient time to exercise its right of defence.

Article 40 – The denial of the request for recognition or enforcement of a foreign arbitral award based on formal defects does not prevent the interested party from renewing the request once such defects are properly cured.

 

CHAPTER VII
FINAL PROVISIONS

Article 41 – Articles 267, item VII; 301, item IX; and 584, item III of the Code of Civil Procedure shall henceforth read as follows:

Art. 267…………..
VII – by the arbitration agreement.

Art. 301……
IX – arbitration agreement

Art. 584….
III – the arbitral award and a judgment confirming a settlement or conciliation.

Article 42 – Article 520 of the Civil Procedure Code shall have a new item, with the following wording:

Art. 520…
VI – grants the motion for the commencement of arbitral proceedings.

Article 43 – This law shall enter into force sixty days after the date of its publication.

Article 44 – Articles 1.037 through 1048 of Law nº 3071 of January 1, 1916 (Brazilian Civil Code); articles 101 and 1072 through 1102 of Law nº 5869 of 11 January 1973, (Code of Civil Procedure); and all other provisions to the contrary are hereby revoked.

Brasilia, September 23, 1996 (Published in the Official Gazette – DOU – 24 September 1996)

Translation prepared by Mauricio Gomm Santos,  a foreign legal consultant with Buchanan, Ingersoll & Rooney, Attorneys and & Government Relations Professionals, Miami offices, and partner with Seleme, Lara, Coelho & Gomm Santos, Advogados Associados, Curitiba, Brazil.  Any inaccuracies in the text are my sole responsibility.

Law n. 11.232/2005 has brought some changes in the Code of Civil Procedure on the way an arbitral award is enforced (article 475-N, paragraph 2) as well as to the way the losing party in the arbitration may file a motion to set aside the award. (article 475-L and 475-M)

Constitutional Amendment n. 45/2004 has shifted the competence to hear request for recognition and enforcement of foreign arbitral award from Brazilian Supreme Court to Brazilian Superior Court of Justice.

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